Investigation & Evaluation of Environmental Analysis - IFG Group
1. TERMS OF REFERENCE
Today, business world is facing to many problems at the same time, but changes are probably one of the main aspects that are more obvious than the others. All companies and organizations are running in a changing world and are subject to outside forces which are more powerful than they are, and these forces are beyond their control. It is very difficult for every business to survive if they don't set up a relation with their external and internal environment. Being through these major changes IFG Group as an organization has to be more concerned about its business, if it wants to succeed and to achieve its objectives and goals. Having the ability to scan these environmental sides, then IFG is capable of gaining competitive advantages and discovering opportunities that help to succeed through its business operation.
2. METHOD OF PROCEDURE
In order to obtain information related to this report a variety of sources were used. The report comprises of mainly secondary research. The company supplied me with valuable data and it was the easiest way to obtain it. Observation was another method of obtaining information by analyzing the environmental sides of the company. By observation I was able to realize what are the strengths, weaknesses opportunities and threats of the company. The network was a very helpful tool to find the basic information about the organization. I used three main websites of the company, the one for the company in Ireland, the website for companies internationally and also the website for the company in United Kingdom.
“Established in 1972, IFG Financial Services is now one of the UK's leading firms of independent financial advisers”. (www.ifg.co.uk ) “IFG Group is a highly diversified financial services company specializing in the provision of independent financial advisory and administrative services across Ireland, the UK and Europe”. (www.ifg.ie ) It is a public limited company which means that as a company it has a separate legal existence from its shareholders. The shareholders have limited liability and its shares can be bought and sold on the stock market by members of the public. “Headquartered in Dublin, Ireland, IFG Group is an international organization with major operations in the UK, Isle of Man, Jersey, Cyprus and Switzerland. IFG Group is listed on the Irish and London Stock Exchanges.” (www.ifg.ie ) In Ireland the company has only one branch located in Booterstown, in Dublin.
“IFG Group is organized into two divisions - Financial Advisory and Trustee and Corporate Services.
Financial Services: IFG is a provider of financial advisory and mediator services in the UK and Ireland. This includes:
* Investment and pension activities
* Actuarial and administrative
* Discretionary fund management for individuals
International &Trustee CorporateServices
* Provision of trustee & corporate structures with related administration and compliance
Provision of specific trustee services to timeshare resorts in Europe and Asia” (www.ifggroup.com)
The customers of IFG Corporate Pension are not private clients but companies. They provide services to employee members. The main customers of IFG are: Fidelity Ireland, Fexco, Merrill Lynch and O2 Telephonica.
The organization chart of IFG Corporate Pension shows that the structure of the organization is tall. There are thirty seven employees, working all full time in the company. At the top of the organization is the Chief Executive Office (CEO) who is at the top of management and is responsible for everything that goes on in the company. Under him there are six other employees. They report to CEO. The Operation Manager is the person who is responsible for every team in the workplacement and she reports directly to the Client Service Director. There are three teams which three of them have their team leader. Each of the teamleader reports directly to the Operation Manager. Every team has five Pension Administrators including the Senior Pension Administrators and they all report to their team leaders. Under each including myself team there are Work Experience students who report to the teamleader.
The department where I am working is the Administration Department. The job that I am doing is support to the team that I belong to. Most of work involves word processing and excel skills. I organize documents and computer-based information. I scan different types of documents and ensure that data is entered into the system. I have been trained in new software that ensures that transactions and investments are properly recorded and entered into the accounting system. I take the morning post of my team and stamp and organize checks.
3.2 Resource Based View
“The Resource Based View is an economic tool used to determine the strategic resources to a firm. The fundamental principle of the RBV is that the basis for the competitive advantages of a firm lies primarily in the application of the bundle of valuable resources at the firm's disposal.” (www.wikipedia.org )
Tangible Assets of the Organization
IFG Company as every other company has a collection of some resources that provides profitability for them. IFG is a company which is very capable financially and this capability they have reached through their services in corporate pension administration, personal advisory in relation to investment, pensions, life insurance etc. The economical situation in the country has impacted the company but it hasn't made their profits to go very low. The building and the furnitures where the IFG operates are not owned by the company but they are renting them. The building and all furnitures are in very good conditions and there is enough space for the company in order to work in a good and worthily environment. IT system of the company consists of computers, fax machines, printers, scanning machine, and telephones. The software is up to dated and very helpful to every employee. It is only one scanning machine in the building which makes slightly difficult for employees when a lot of scanning needs to be done.
Intangible Assets of the Organization
IFG is a company that has a lot of customers. Its customers are loyal to the company because IFG works hard to fulfill their needs and objectives and they are willing to invest their money in their pension believing in IFG. The brand name isn't as strong compare with its competitors. People are not aware as much as they are for other company which provide the same or even more services than IFG. At this time people want to know what they are spending their money on more than ever, so it is very important that IFG set some strategies in order to increase the awareness of their brand name.
IFG consists of a new dynamic team. Most of the workers are really committed to their work and they are ready to help each other when someone needs help. The sales team is also well resourced with good support. IFG offers an innovative technology compare with its customers. CPAS is the technology platform used by IFG which achieved awards and is a very supportive technology when it comes to investments. Another core strength of IFG is lifestyle investment offering developing and maintaining the correct investment strategy compare with its competitors.
Sustainable Competitive Advantages
IT technology is a competitive advantage towards its competitors. The IT system is value to the company because a lot of important job is being done using this system. It is immobile and non imitable. Lacks of Brand Awareness in Market and brand confusion are not a sustainable competitive advantage, but the company has the financial capability to make this happen. IFG offers a good customer service. They have created a good relationship with their customers. This is a no substitute aspect and a value to the company because increases the loyalty of their existing customers and helps in adaption of new customers.
3.3 Value Chain Analysis
“The Value Chain Analysis is a systematic approach to examining the development of competitive advantage. It was created by Michael Porter in his book Competitive Advantage (in 1980). The chain consists of series of activities that create and build a value. They culminate in the total value delivered by the organization. The organization is split into “primary activities” and “support activities”.” (www.marketingteacher.com )
IFG is a service provider company. Three are the main suppliers of the company: stationery suppliers, investments suppliers and IT suppliers. The order and the collection of the stationery for the company are always on time.
IFG Corporate Pension provides services for individual companies in relation to their employee pensions. They try to understand the retirement objectives of these employees. The company provides financial advisory for the companies. Another key service of IFG is Actuarial and Legal services.
The website of IFG is one way where people get to know what are the services that they provide. They do have consultants also who are able to discuss and advice the customers who need support.
Marketing and Sales
Nowadays people are becoming every day more conscious about they retirement life. They start to invest in their pension at early stages. IFG is aware of their objectives and they fulfill them. Most of the companies are going through difficult times because of the recession in the country and IFG is concerned in giving financial advisory.
IFG consists of a new dynamic team and the staff is very helpful when it comes to support companies' costumers after the service is offered to each of them. They do keep a regular contact with their customers and inform them for any change that might have happened related to everyone's needs. They also arrange regular appointments with its costumers.
► Support Activities
Infrastructure of the Organization
The managers of the company run the business in day to day basis and they have responsibilities for everything that happens in the company. The consultants deal with costumers needs and they give financial advisory. There are the pension administrators also who are making sure that every need of customers is fulfilled. Every employee has his/her own values and practices therefore the culture of the company is diversified. Every new employee brings new practices and values. The culture is also affected by regulations and rules of the management.
Human Resource Management
Recruitment for IFG company is very important because if the company wants to achieve its goals and objectives somehow needs to be based on the workforce. They are keen in hiring people who have and educational degree and also a previous job experience. Training is very essential for IFG; therefore they provide training for their employees especially when new IT software is being used by the company.
Developing the technology is very significant for the company. The management supports the technology because they are aware that by doing so they affect the industry and also the cost of the services that they provide. The IT system are procured not in house and they try to use this system as a competitive advantage towards it competitors.
The company is not depended too much in its suppliers because it is a service provider company. In the market there are too many suppliers where the company can choose from. The investitures suppliers are the one which company negotiates and is more related to because they take the responsibility to invest the money in different funds.
3.4 SWOT ANALYSIS OF IFG
“A particularly useful approach to examining the relationship between an organization and its marketing environment is to carry out a SWOT analysis.” (Needham & Dransfield et. al, 1999) As for every company, IFG's SWOT analysis focuses on Strengths, Weaknesses, Opportunities and Threats. It includes internal (Strengths & Weaknesses) and external (Opportunities & Threats) sides of the IFG environment.
► Corporate Growth and Profitability
► Financial Capability
► Good Services
► Good Relationship with their Customers
► Good management team
► Limited Services
► Vulnerable to staff being sick, leaving
► Economical situation
► Lack of staff motivation
► New and rapidly growing markets
► Expanding services
► Strengthen the brand name
► Continuous focus on Corporate Pension
► Growing the number of customers
► A market led by stronger competitors
► A business that recession has affect on
► Downturn of the economy
► Entry of new competitors
► High rate of unemployment
IFG is a company that within a few years has expanded through different major European countries such as Switzerland, Jersey, Cyprus etc. As a result of such a growth, their business has been successful throughout the years and all this success has turned into good profitable achievements. “The company has reported that operating profit for the first six months ended 30 June 2009 was €12.7 million compared with €10.5 million in the previous period of year 2008.” (www.ifggroup.com)
The Corporate Pension businesses have performed very well in these economical crisis situations all around the world. “IFG Group is listed on the Irish and London Stock Exchanges and at28th May 2009 had a market capitalisation of just under €73 million.” (www.ifggroup.com). This clearly states that IFG as a company is well capable when it comes to the financial resources.
The services that IFG provides are at a high standard to all their customers. They understand the fact that different customers have different objectives and needs; therefore they are capable to offer unique solution for each of them. Across the services they promise professionalism and helpful advices. IFG offers for its client services that are related to today's market needs.
IFG does realize that customers have an important role in a company and they give them the time and the consideration they deserve. They are ready whenever the customers might need them to offer them support and advices. By doing so, the customers are grateful for their contribution. They contact their clients regularly and let them know for any changes that might have happened in the sector or in the scheme that they are interested in.
Everyone from the personnel in Corporate Pension has a clear vision of company's objectives. They have a good relationship between each other and they try to help and to find information for one another in critical situation. Having this flexibility among the staff creates a good environment and helps to keep up the good work of the company.
IFG is a company that unfortunately is not the only one on the market. In Ireland there are other companies that deal with the pensions and provide the same or even more services that IFG does. Providing limited services compare with other competitors, is a serious weakness for IFG Group. There are other companies in the country that provide the same services that IFG does but with stronger investment consultancy and sales approach.
When it comes to staff being sick or leaving, IFG as a company doesn't do its best to have the problem solved. It happens so often when some of the employees might not be able to work because they are out of office sick, and there is a lot of work to be done. All the responsibility for their work somehow falls to the workers that are in. Currently there is a lot of work in the company, which needs too be done immediately but there is not enough personnel.
The economic situation all over the world and of course in Ireland has a huge impact in the way that IFG business performs. The number of unemployment is increasing every day and as a result of this people cannot afford to invest in their pensions. Price war with the competitors is also much more developed than before when the economy of the country was not in critical situations.
Lack of staff motivation is an issue that might turns into a big disadvantage for IFG. Some of the workers don't have that desire and energy to work hard towards achieving an objective or goal. These people are not willing to create an atmosphere that helps the company and they are not building up a communication line that helps them to be connected with other workers.
IFG has grown and expand to other countries in a few years. This opportunity is still out there for them to get even larger. They have the financial capability to do that. Good reputation also to different country is already built which helps them to grow more internationally and why not globally.
IFG has good opportunities to expand their programs and services. Knowing that its services are limited comparing with other companies then these opportunities become more powerful. The financial capability plays a big role in doing so, and they have it. Covering other new services such as, health insurance etc would be a great advantage related to profitability of IFG.
During these economic crises strengthen the brand name for IFG is one of the main objectives. Customers want to know and to understand even more than before when they choose to pay for a service. They have some particular opportunities that help them to achieve this objective. They are working to build a solid reputation in the market and to maintain the professionalism in everything they do.
The business model of IFG is operating to ensure that the Corporate Pension offers services that are relevant to the changing needs of customers. They want to approach productively in delivering planning solution for Ireland's biggest companies and for everyone who is interested to invest in his/her pension. IFG is aspired to meet pension goals of individual persons and companies and to works hard in understanding and completing their retirement objectives.
IFG provides valuable services and this is the key to maintain the customers they have and also to get new customers involved in their business. Across their services they guarantee independent, a detail that every customer pays attention on. Using the technology and high level of administrative support will attract more customers for IFG.
In the market where IFG operates there are some other companies that are stronger and being so they are capable to lead the market. They compete with IFG with the services they provide, because the do provide a wider range of services. They are larger as companies than IFG is, internationally and globally. This is a threat that impacts IFG's objectives and goals.
Threat of recession in Ireland has a big affect on IFG's business. This business is affected in so many ways. Pension rates decided by government have a huge impact on how the company operates and these leads to weather increasing or decreasing the number of customers. The recession might decrease the number of customers of IFG. It impacts the vision and the mission of IFG.
Ireland's economy has turned down so rapidly, recently. This downturn has changed the way that companies and organizations operate. IFG is one of these companies that has been involved in this downturn of the economy. Its profits are affected negatively which means that they are lower compare with couple of years before. The rate of pension decided from government changes the way that IFG approaches its business because as a company it is more focused on Corporate Pension.
Power of IFG is affected by the ability that other new entrants might enter the market. Knowing that in general people are getting every day more conscious about their retirement objectives, new companies may wish to enter this market and to offer to customers these services, at a lower price than IFG provides and why not new services.
As result of economic situation the rate of unemployment is increasing every day. Being unemployed is more difficult for a person to invest in their pension because they cannot afford it. This is a threat for IFG Company because not only will be able to attract new customers but might also loose the ones that they already have.
3.5 PEST ANALYSIS OF IFG
“PEST analysis is technique that enables companies to analyse four external factors that may impact the performance of the organization. These factors are related to macroenvironmental factors and they are: Political, Economic, Social, and Technological.” (Needham & Dransfield et. al, 1999) It includes the external side only of a company environment.
► Political stability
► Employment legislation
IFG is influenced so much by the legislation of the country. The flexibility and adaptability of law and other rules is a challenge for IFG because its services are related to changes that may happen in the legislation of the country. These can affect not only the business of the IFG but its customers also.
Taxation is a factor that has impact on IFG financially. IFG as most of the companies is involved in different types of taxation, but the main ones are: the annual income tax that IFG should pay according to its annual profits, pay-roll taxes are also another type of taxes that IFG should pay according the amount of wages of its employees per month.
Stability of the government and the economic policy of government have impact on the way that IFG performs in the market. Understanding and familiarizing with the political nature is very important for IFG. If the political environment consists of high level of stability than it's much easier for IFG to approach its business.
Employment legislation and policy has impact on IFG business and on the market where it operates. The legislation might raise the cost of labor for IFG. This legislation might have also their positive sides, for example when they stimulate to improve the way that workers work and the discipline that needs to be followed at workplace.
► Labor costs
► Impact of changes in the economy
► Interest rates
The effect and the cost of inflation can damage IFG's business and customer. Inflation can cause a reduction in IFG's savings. When it comes to IFG's customer, inflation can cause a reduction to their value of income, especially for the ones who have a fixed pension. Future plans of IFG are also affected in a negative way, because it makes more difficult to achieve its objectives and goals.
Wages that are paid to workers, payroll and taxes etc have an influence on IFG Company. Labor cost is an element that is out of control of IFG and it is a big challenge to cope with it without damaging its business and its customer service. Offering training systems to train their workers helps IFG's workers to do their job more efficiently and as result of this labor cost is reduced.
Ireland economy is linked somehow with global economy, so any changes that might incur in global economy have impact on Ireland's economy. These changes affect financial capability of IFG. If the economy is regressing, then probably the cost of service that IFG provides will be lower and as a result of this their value will be little.
Interest rates affect IFG's business especially when they are planning to invest capital in the business where they run. If the interest rates are falling than the company will be more confident about its investments. Low interest rates mean that IFG would be more likely to borrow money from banks than where these rates are high.
► Population growth
► Population education
According to Central Statistics Office Ireland (www.cso.ie) number of population in Ireland has increased year by year. This leads to new and more customer for IFG and new financial sources also. The higher the education of the population the greater is the understanding of investing in pension. Central Statistics Office Ireland has published on its website that the education of the population has been increasing compare with couple of years before. Due to economical climate more people are going back to education. As result of this in the future they have more possibility to find jobs with better income, and they will be more capable to invest in their pensions.
Most of the people are conscious about the fact that the State Pension won't be enough for their future. They are aware that they should invest in their pension in early stages if they don't want to face a fall in their income when they retire. Generally people believe that the sooner they start to save, the better will be the pension in their retirement stage. There are some other people as well who think that investing in pension is “high risk” because it depends in what fund the money was invested and the level of risk.
Currently the unemployment rate has reached a quite high level in Ireland. People are losing their job every day and as result of this their income has gone lower. So the amount of money that they invest in their pension is reduced. As higher is the income and securer the job as much more money will be invested in pensions.
► Rate of transferring technology
► Software changes
Nowadays the technology is useful to everyone, especially to organization. Rate of transferring technology is getting high every day. Changing the technology in the organization would cost for IFG. In this case the complexity of the new technology should be considered. Another side of this is staff training which will be an extra cost.
Devices are a very helpful tool for every company. IFG organize a considerable part of the work with different devices such as: scanners, printers, fax machines, telephones etc. The technology is developing new applications everyday for these devices. In order to keep up with the new technology IFG has to adapt these changes.
Nowadays is very difficult to find software that does not need to be changed or adjusted. Almost all of them need to be modified or changed. To change the software is very important for IFG because somehow the company is depended on it. A significant amount of money goes for changing the software. When that needs to be done IFG should certainly do it in the right time because their business is relied on software.
Internal communication in IFG is complete through different ways. They use intranet which allows them to share information among each other and telephone. All the employees have their own computer, so their “voice” is heard. According to external communication which is the main way to approach their customer they communicate through Web sites, telephones, fax machines, contact letter, advertising etc.
3.6 PORTER'S FIVE FORCES
► Competitive Rivalry
IFG operates in a market where the competition is considered to be quite high in its own level. Over all market share of IFG is 5 %. Three main competitors of IFG are INVESCO, MERCER and HEWITTS. These are larger organization than IFG. INVESCO's fees are sometimes below market price, and this is an advantage for them to get more customers. They have office in Cork which also gives them regional advantages. Brands of these organizations are specialized in several different services, and some of these services are not provided by IFG. Most of these competitors provide strong investment consultancy and better sales approach than IFG.
► Power of Buyers
At times when the economy of the country is not doing well but is in a critical situation the power of buyers increases every day. Costumers of IFG have a lot of power on the company. Knowing that other companies provide a range of services and for some of them the cost is much lower than services of IFG, the possibility to switch is very high. There are a considerable number of companies which deals with Pension, and as result of this buyers have opportunities where to choose from.
► Power of Suppliers
IFG is a service provider company and this indicates that the power of suppliers is very low. The main suppliers are the company which provides them with stationery, the investment managers and the IT suppliers. The IT supplier supplies them with CETRIX (CPAS) which is the main software that deals with investments and contributions. They have little power because there are several IT suppliers in the market where IFG can choose from. The same is the rapport with stationery suppliers they also have little power on the organization. Two main investment managers are Irish Life and Hibernian Aviva. They don't have a huge influence on the company because there are a lot of stock brokers where IFG can switch to.
► Threat of Substitutes
Corporate Pension is one of the two divisions of IFG. Related to this corporate, threat of substitution is very low almost invisible. Customers don't really have another service that they might replace with. There aren't alternatives services that customers can decide to go for, but there is always possibility that some people may not choose to invest in their pension because they are happy enough with the pension that State offers to everyone when they retire.
► Threat of new Entrants
IFG is threatened slightly by the fact that other company may enter the market where they operate. There are already sufficient companies that provide services that customers need but another one may enter providing these services at a lower price. The industry where IFG runs has some barriers to enter, i.e., government legislation: this industry is so much affected by the government legislation such as introduction of new laws, pension rates etc. Cost of entry is also another barrier to entry. The difficulty to switch to another new brand is also a barrier because the awareness of IFG customers is increasing every day.
The business world is created in such a way that every company even if any is doing very well is always affected by some forces that are outside its environment and can have a continuous impact on it. SWOT, PEST and Porter's Five Forces analysis are techniques that make visible to companies these forces that might impact them and also help them to set up strategies to achieve their objectives.
IFG is a company that is concerned about its customer's needs and works hard towards fulfilling these needs. IFG is going through difficult times as result of economical situation in the country, but the strengths that distinguish it as a company are great advantages to keep the business running. The opportunities are also a benefit for IFG to get the business growing, to increase the brand awareness and to expand in other countries. Weaknesses and threats compose difficulties for IFG to achieve their goals. Political and economical factors have also a huge impact on IFG because the services that IFG provides are so much related to political and economical changes. At the present time IFG is not threatened hugely that new entrants might enter the market, or threat of substitution because the industry where they operate has barriers and its not the perfect time for a company to enter the market, but rivalry is an existing element that is being seen as a risk for organization.
IFG Group is a company that in one way or another has shown that knows how to succeed in the market. However depending on the way that they operate there is always room for improvement in order to keep that success growing.
IFG should create a more satisfactory work environment by encouraging the employees, increasing the technical skills of them and also providing the necessary training methods for each of employee. Only by doing so the performance of workers will become more efficient in the workplace.
I suggest that IFG should exploit their ability to develop the services that they already have in the market and to expand the range of this services in order to increase the number of customers and to be able to compete with their main competitors.
I recommend that IFG should be more conscious about the importance of having enough employees in order to get the job done as best as they can. The staff that they already have is not capable to accomplish all the responsibilities of the company.
Increasing the awareness of the brand would be a great advantage for IFG. By doing so the number of customers will increase and a good reputation leads to loyalty of the customers.
1. Dave Needham, Rob Dransfield, Phil Guy, Mark Shaw and David Dooley, (Marketing for Higher Awards), First Published 1999.
2. Philip Kotler and Gary Armstrong, (Principles of Marketing, Fifth Edition), First Published 1991.
3. www.ifg.co.uk - Company's British Website.
4. www.ifggroup.com - Company's International Website.
5. www.ifg.ie - Company's Irish Website.
6. www.maven.files.wordpress.com/2008/01/porter5forces3.gif - Accessed on Friday, 4th December 2009.
7. Marketing Management handouts given out by Vivienne Bates.
8. Business Management handouts given out by Karen Abberton.
9. http://www.emeraldinsight.com/fig/0680170405002.png - Accessed on Saturday, 12th December 2009.
10. http://en.wikipedia.org/wiki/Resource-based_view - Accessed on Saturday, 12th December 2009.
11. http://www.marketingteacher.com/Lessons/lesson_value_chain.htm - Accessed on Saturday, 12th December 2009.